Market Buzz: Surfing the European wave

Investors in Russia keep watching Greece, as well as reacting to oil dynamics.

Among strong market drivers on Wednesday will be the May index for eurozone business climate, which is generally expected to stand at -0.66 points. “This may cause a negative response in the European stock market,” says Kirill Markin of Investcafe.

The US stocks were up in Tuesday session in spite of the weaker-than-expected report on US consumer confidence and continued declines in home prices. The Conference Board, a private research group, said that its Consumer Confidence Index fell to 64.9 from 68.7 in April. The Case-Shiller 20-city Index, which tracks home prices, fell at a 2.6% annual rate in March, after falling at a 3.5% rate in the prior month. Economists had expected the index to have slipped 2.8%.

In Asia, increasing concern over Spain's worsening financial condition and a report that China has no plans for a major economic stimulus dragged Asian stock markets lower Wednesday morning.

Japan's Nikkei 225 index fell 1% to 8,571.90 and Hong Kong's Hang Seng tumbled 2.1% to 18,642.37. South Korea's Kospi was down 0.9% to 1,833.09. Australia's S&P/ASX 200 lost 0.9% to 4,076.40 and benchmarks in mainland China, Taiwan and Singapore also fell.

Worries about Europe's financial stability worsened after US ratings agency Egan-Jones slapped Spain with a downgrade Tuesday because it may have trouble repaying its debt amid slowing growth and rising unemployment. Spain has a 24.4% jobless rate and is battling its second recession in three years.

Markets also reacted to a microblog posting by China's official Xinhua News Agency that said Tuesday the government had denied reports it planned a massive new stimulus program. However, that report was later deleted and no other Chinese media outlets carried it. Chinese leaders have recently indicated their intention to implement limited measures to help rev up the economy.